Why a will doesn’t avoid probate: An estate planning guide for advisors

What advisors should know about wills, probate, and estate planning

A common myth in estate planning is that most believe a will means their family won’t have to worry about probate. Unfortunately, a will does have to enter probate court and reach a judge’s desk before anything can happen. Not knowing that wills have to go through probate costs families a large amount of the money they thought they were saving. 

When the time comes when a will is needed, it’s often too late to counter-correct the misconceived idea of what a will does. By this time, the will is now entering the courts. The family is confused, frustrated, and now disappointed by the additional administrative weight on their shoulders. Nobody knew that a will could take anywhere from 6 to 9 months to finally access the assets. And that’s if everything goes smoothly and there aren’t any arguments. 

Chad Brocato, Esq., has over 20 years of experience as an attorney in Florida to help financial advisors through the probate system, offer solutions to how to avoid it, and explain why everyone wants to avoid probate. We are so grateful for his partnership, time, and expertise here for our team. For all interested, you can watch his webinar by clicking the play button on the cover photo above.

What is probate and why does it matter to financial advisor clients?

Probate is a court-supervised process with a judge. Probate exists to provide a way to transfer a deceased person’s assets to their beneficiaries. Part of this process includes determining who receives what, settling any outstanding debts, and distributing all that remains. Probate exists in all 50 states and Washington DC, and each may have state-specific laws related to estate planning. 

What most families and financial advisors may not realize is that when a will enters probate, the family no longer has control over the process. The timelines can range anywhere from 6 months to more, depending on the courts and state. The passing of this person may already be challenging enough. Adding another layer that is messy, long, and unpredictable adds an extra level of unnecessary frustration for any family. 

Additionally, anything that touches courts becomes public record, including wills. So not only is this a difficult, long, and sometimes painful process, but it also becomes public. Everything that was likely meant to quietly pass to a loved one is now recorded publicly.

Why having a will doesn’t keep an estate out of probate court

A will has no legal validity until a judge gives it validity. That means wills have to go through probate. Wills are never designed to avoid probate. In fact, Chad explains that the word “probate” originates from the idea “to prove a will.” A will is a set of instructions made for a judge’s interpretation.

Wills answer what should happen, not how to do it. That’s where the courts step in. When someone passes, everything they owned is still in their name. Now there’s nobody to manage or care for these assets. It’s considered stealing if, even a loved one, tries to step in and take what they think is meant for them. Probate interprets what should happen from the will. Then, with legal authority, the courts can confirm that what the loved ones feel should happen with an asset is then transferred or discussed, if that’s not what should happen.

What happens when someone dies without a will

When someone dies without a will, the state has intestacy laws. State intestacy laws determine who inherits and the hierarchy of who receives what. For example, creditors may have the first opportunity to pay debts before anything is offered to family members. Intestacy also looks for who the closest relation is to the person; very few times does the money just transfer to the state. 

State intestacy laws look for the closest relationships on paper. The laws typically default to spouses or children first. Chad always makes a point to address this in crowded rooms with lots of divorced individuals with minor children. Oftentimes, these individuals don’t know that without a will, their assets may transfer through the minor child that the ex-spouse is legally entitled to now care for. 

In Florida, where Chad practices, intestacy laws add another curveball when the deceased parent has both full-blood and half-blood children. Under current Florida law, half-siblings are entitled to receive half the share of a full-blood sibling. Depending on family circumstances, maybe that’s not what was intended to happen in the first place.

Intestacy doesn't account for blended families the way most people assume. These laws place finding the closest relational person over emotional and personal relationships developed in families over a lifetime. Without a will, someone will be forgotten, or unintentionally given something that the person hoped to give to someone specific.

Will vs. Trust: What’s the real difference

A will is a legal document that tells the court how to distribute your assets after someone dies. Wills enter probate court before any assets can be transferred. A trust is a legal entity that owns and holds assets on behalf of the grantor. Assets in a trust can be transferred to beneficiaries without court involvement. 

A trust can hold and own assets like houses, cars, investment accounts, or a business. Having a trust in place avoids probate because a trust answers what should happen and how it should happen. The trust acts as the asset’s owner, not the deceased person. Because the trust is the named owner and has instructions for what should happen to the assets, who receives what, and how they are to receive it; nobody has to interpret what should happen.

A will cannot own anything. Chad describes a will as “fancy instructions to a judge.” A will needs probate because it answers what should happen, but someone with legal authority needs to authorize the legal transfer from the deceased owning the asset to giving that asset to another person. 

Both a trust and a will offer solutions to moving assets from a deceased person to a loved one. It just depends on a client’s needs and expectations. Trusts tend to require more up-front payment. Trusts may also be a little more work to create and to fund. But trusts can be adjusted, transferred, and often, self-managing if something happens. Wills become in effect post-death and are often created at a much lower cost upfront. However, with probate and other costs associated with legal and court fees, it likely costs more on the backend.

Where does a financial advisor fit into estate planning 

Chad speaks highly of what financial advisors can do in estate planning conversations. Financial advisors know the client’s financial picture better than anyone else. They see what assets are there and can help with funding trusts properly. 

Chad offers practical advice to help advisors feel less worried about crossing compliance or legally gray areas. When starting estate planning conversations in the office, advisors can consider some of these approaches. 

Financial advisor talking points for estate planning conversations: 

• Ask clients if they have an existing estate plan. That question opens the door. 

• Show three different planning paths: no plan, will-based plans, and trust-based plans. 
• Help clients understand why staying out of probate matters for their family.
• Guide clients toward getting a plan in place and making sure documents get signed.
• Check that beneficiary designations are current and assets are titled correctly.
• Stay involved through the funding process to make sure the trust actually owns what it is supposed to own.

Chad has seen what happens when someone doesn’t have a plan or assumes that it’s all going to turn out the way they wanted. What they’re missing is the full picture of what to expect and how to prepare. Chad kindly offers solutions and strategies that all financial advisors and their clients should know before anything could happen. 

Watch Chad Brocato share what every advisor and family should know about avoiding probate. The bottom line though? Chad says, "Stay out of probate if you remember nothing else." 

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